SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Blonder Tongue Laboratories, Inc.
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(Name of Registrant as Specified In Its Charter)
Blonder Tongue Laboratories, Inc.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
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4) Proposed maximum aggregate value of transaction:
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[ ] Fee paid previously with preliminary materials.
<PAGE>
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
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<PAGE>
BLONDER TONGUE LABORATORIES, INC.
One Jake Brown Road
Old Bridge, New Jersey 08857
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 7, 1998
To the Stockholders of Blonder Tongue Laboratories, Inc.:
The 1998 Annual Meeting of Stockholders of Blonder Tongue Laboratories,
Inc. (the "Company") will be held at the Doubletree Hotel Somerset, 200 Atrium
Drive, Somerset, New Jersey 08873, on May 7, 1998, at 10:00 a.m., local time,
for the following purposes:
1. To elect two Directors constituting Class III of the Board of
Directors to serve until the 2001 Annual Meeting of
Stockholders or until their successors have been elected and
qualified;
2. To consider and vote upon an amendment of the Company's 1995
Long Term Incentive Plan to increase the aggregate number of
shares which may be issued pursuant to options or restricted
stock awards granted thereunder from 500,000 to 750,000;
3. To consider and vote upon the approval of the Company's
Amended and Restated 1996 Director Option Plan;
4. To ratify the appointment of BDO Seidman, LLP, certified
public accountants, as the Company's independent auditors for
the year ending December 31, 1998; and
5. To transact such other business as may properly come before
the meeting or any adjournments thereof. In their discretion,
the Proxies are authorized to vote upon such other business as
may properly come before the Annual Meeting or any
adjournments thereof.
A Proxy, if properly executed and received in time for the voting, will
be voted in the manner directed therein. If no direction is made, such Proxy
will be voted FOR all proposals therein.
The Board of Directors has fixed the close of business on March 16,
1998, as the record date for determining stockholders entitled to notice of the
meeting and to vote at such meeting or any adjournments thereof, and only
stockholders of record at the close of business on March 16, 1998, are entitled
to notice of and to vote at such meeting or any adjournments thereof.
Your attention is directed to the attached Proxy Statement for further
information regarding each proposal to be made.
You are cordially invited to attend the meeting. Whether or not you
plan to attend, you are urged to complete, date and sign the enclosed proxy and
return it promptly. If you receive more than one form of proxy, it is an
indication that your shares are registered in more than one account, and each
such proxy must be completed and returned if you wish to vote all of your shares
eligible to be voted at the meeting.
By Order of the Board of Directors
Robert J. Palle, Jr., Executive Vice President
and Secretary
April 6, 1998
----------
PLEASE COMPLETE AND RETURN THE PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING AND DESIRE TO
VOTE IN PERSON AT THE MEETING, YOUR PROXY WILL BE RETURNED TO YOU UPON WRITTEN
NOTICE TO THE SECRETARY OF THE COMPANY REVOKING YOUR PROXY.
<PAGE>
BLONDER TONGUE LABORATORIES, INC.
One Jake Brown Road
Old Bridge, New Jersey 08857
PROXY STATEMENT FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
MAY 7, 1998
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Blonder Tongue Laboratories,
Inc., a Delaware corporation (the "Company"), to be voted at the 1998 Annual
Meeting of Stockholders of the Company (the "Annual Meeting") to be held at the
Doubletree Hotel Somerset, 200 Atrium Drive, Somerset, New Jersey 08873 on May
7, 1998, at 10:00 a.m., local time, and at any adjournment or adjournments
thereof.
All proxies delivered pursuant to this solicitation are revocable at
any time before they are exercised by written notice to the Secretary of the
Company, or by delivering a later dated proxy. Attendance at the Annual Meeting
will not, without delivery of the written notice described in the immediately
preceding sentence, constitute revocation of a proxy. The mailing address of the
principal executive offices of the Company is One Jake Brown Road, Old Bridge,
New Jersey 08857. The Company's telephone number is (732) 679-4000. This Proxy
Statement and the enclosed form of proxy will be mailed to each stockholder on
or about April 6, 1998, together with the Annual Report on Form 10-K for the
year ended December 31, 1997.
All properly executed proxies delivered pursuant to this solicitation
and not revoked will be voted at the Annual Meeting in accordance with the
directions given. Regarding the election of Directors to serve until the 2001
Annual Meeting of Stockholders, in voting by proxy, stockholders may vote in
favor of all nominees or withhold their votes as to all nominees or withhold
their votes as to specific nominees. With respect to the other proposals to be
voted upon, stockholders may vote in favor of a proposal, against a proposal or
may abstain from voting. Stockholders should specify their choices on the
enclosed form of proxy. If no specific instructions are given with respect to
the matters to be acted upon, the shares represented by a signed proxy will be
voted FOR the election of all nominees, FOR the proposal to amend the 1995 Long
Term Incentive Plan by increasing the number of shares of Common Stock available
for awards thereunder, FOR the proposal to approve and adopt the Company's
Amended and Restated 1996 Director Option Plan, and FOR the proposal to ratify
the appointment of BDO Seidman, LLP as independent auditors for the fiscal year
ending December 31, 1998. Directors will be elected by a plurality of the votes
cast by the holders of the shares of Common Stock voting in person or by proxy
at the Annual Meeting. Thus, abstentions will have no effect on the vote for
election of Directors. Approval of any other matters to come before the Annual
Meeting will require the affirmative vote of the holders of a majority of the
shares of Common Stock of the Company present in person or by proxy at the
Annual Meeting. Broker non-votes, which occur when a broker or other nominee
holding shares for a beneficial owner does not vote on a proposal because the
beneficial owner has not checked one of the boxes on the proxy card, are not
considered to be shares "entitled to vote" (other than for quorum purposes),
will not be included in vote totals and will have no effect on the outcome of
any matters to be voted upon at the Annual Meeting.
Management is not aware at the date hereof of any matter to be
presented at the Annual Meeting other than the election of Directors and the
other proposals described in the attached Notice of Annual Meeting of
Stockholders. If any other matter is properly presented, the persons named in
the proxy will vote thereon according to their best judgement.
The expense of soliciting proxies for the Annual Meeting, including the
cost of preparing, assembling and mailing the notice, proxy and Proxy Statement,
will be paid by the Company. The solicitation will be made by use of the mails,
through brokers and banking institutions, and by officers and regular employees
of the Company. Proxies may be solicited by personal interview, mail, telephone
or facsimile transmission.
<PAGE>
Only owners of record of shares of the common stock, $.001 par value
per share, of the Company ("Common Stock") at the close of business on March 16,
1998 (the "Record Date"), are entitled to notice of and to vote at the Annual
Meeting or any adjournments or postponements thereof. Each owner of record on
the Record Date is entitled to one vote for each share of Common Stock of the
Company so held. There is no cumulative voting. On the Record Date, there were
8,245,494 shares of Common Stock issued, outstanding and entitled to vote.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The Company's Certificate of Incorporation, as amended, provides that
the Board shall consist of between five and eleven members, as determined from
time to time by the Board, divided into three classes as nearly equal in number
as possible. The size of the Board has currently been set at eight. The term of
Class I Directors expires at the 1999 Annual Meeting, the term of Class II
Directors expires at the 2000 Annual Meeting and the initial term of Class III
Directors expires at the 1998 Annual Meeting. Thereafter, the successors to each
class of Directors whose terms expire at succeeding Annual Meetings will be
elected to hold office for a term expiring at the Annual Meeting of Stockholders
held in the third year following the year of their election.
The Directors whose terms will expire at the 1998 Annual Meeting of
Stockholders are James F. Williams and Robert B. Mayer, both of whom have been
nominated by the Board to stand for reelection as Directors at the 1998 Annual
Meeting of Stockholders, to hold office until the 2001 Annual Meeting of
Stockholders and until their successors are elected and qualified. Messrs.
Williams and Mayer have consented to serve for the new terms, if elected.
Recommendation of the Board of Directors Concerning the Election of Directors
The Board of Directors of the Company recommends a vote FOR James F.
Williams and Robert B. Mayer as Class III Directors to hold office until the
2001 Annual Meeting of Stockholders and until their successors are elected and
qualified. Proxies received by the Board of Directors will be so voted unless
stockholders specify in their proxy a contrary choice.
DIRECTORS AND EXECUTIVE OFFICERS
Nominee and Continuing Directors
The following table sets forth the names and certain information about
each of the nominees for election as a Director of the Company and the
continuing Directors of the Company:
<TABLE>
<CAPTION>
Director
Name Age Since
---- --- --------
Directors not standing for election this year whose terms expire in 1999 (Class
I Directors):
<S> <C> <C>
James A. Luksch(1)......................................................67 1988
John E. Dwight(2).......................................................62 1995
Robert E. Heaton .......................................................68 1998
Directors not standing for election this year whose terms expire in 2000 (Class
II Directors):
Robert J. Palle, Jr.(1).................................................52 1993
James H. Williams.......................................................66 1988
Gary P. Scharmett.......................................................42 1997
</TABLE>
2
<PAGE>
<TABLE>
Nominees for three-year term expiring in 2001 (Class III Directors):
<S> <C> <C>
James F. Williams(2)(4).................................................40 1993
Robert B. Mayer(2)(3)...................................................66 1995
</TABLE>
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(1) Since December, 1995, a member of the 1996 Director Option Plan Committee of
the Board of Directors.
(2) Since December, 1995, a member of the Audit Committee of the Board of
Directors.
(3) Since December, 1995, a member of the Compensation Committee of the Board of
Directors.
(4) Since September, 1997, a member of the Compensation Committee of the Board
of Directors.
Set forth below is a brief summary of the recent business experience
and background of each nominee, continuing Director and executive officer:
James A. Luksch, 67, has been the President and Chief Executive Officer
and a Director of the Company since November, 1988. He became Chairman of the
Board in November, 1994.
John E. Dwight, 62, became a Director of the Company on December 14,
1995, immediately after the completion of the Company's initial public offering
of Common Stock. He became a Senior Vice President of the Company in September,
1997. From 1992 until September, 1997, Mr. Dwight served as President of Film
Microelectronics, Inc., a designer and manufacturer of microelectronic products.
From 1989 to 1992, he was employed by Wavetek, Inc., an electronic testing and
measurement company, as President of its Wavetek Communications Division.
Robert E. Heaton, 68, became a Director of the Company in March, 1998.
Since April, 1995, Mr. Heaton has served on the Boards of Directors of Slater
Industries, Inc., Calstrip Steel Corp. and Precision Specialty Metals. From
April, 1993 through April, 1995, Mr. Heaton served as Vice Chairman of the
Stainless Steel Group of Lukens, Inc. From April, 1981, through April, 1993, Mr.
Heaton was President and Chief Executive Officer of Washington Steel Corporation
until it was acquired by Lukens, Inc. Mr. Heaton is a past Chairman of the
Specialty Steel Industry of North America.
Robert J. Palle, Jr., 52, has been the Executive Vice President and
Chief Operating Officer of the Company since April, 1989. He became a Director
of the Company in September, 1993.
James H. Williams, 66, has been a Director of the Company since
November, 1988, and served as Chairman of the Board from the Company's inception
until November, 1994. He presently serves as a consultant to the Company under a
written agreement. Mr. Williams served as Chairman of the Board and Chief
Executive Officer of Integrated Waste Services, Inc. from September, 1989 until
April, 1996.
Gary P. Scharmett, 42, became a Director of the Company in December,
1997. Since January, 1989, Mr. Scharmett has been a partner in the law firm of
Stradley, Ronon, Stevens & Young, LLP, the Company's outside counsel.
James F. Williams, 40, became a Director of the Company in September,
1993. Since April, 1996, Mr. Williams has been the Chairman of the Board and
Chief Executive Officer of Integrated Waste Services, Inc. ("IWSI"). From June,
1990 through April, 1996, Mr. Williams served as Vice President of IWSI. U.S.
Dismantlement Corporation ("USDC"), for which Mr. Williams serves as a Director,
is an indirect, wholly-owned subsidiary of IWSI. In early 1997, USDC's Board
determined to cease operations and liquidate its business. Toward the end of
that process, an uncontested, involuntary bankruptcy petition was filed against
USDC on May 28, 1997. An order closing this proceeding was issued by the court
on December 31, 1997. Mr. Williams is the nephew of Mr. James H. Williams.
Robert B. Mayer, 66, became a Director of the Company on December 14,
1995, immediately after the completion of the Company's initial public offering
of Common Stock. From 1966 to 1991, he served in various executive positions,
including Director and Regional President of Norstar Bank, N.A. (formerly known
as Liberty
3
<PAGE>
National Bank & Trust Co.), a member of Fleet Financial Group. Mr. Mayer has
from time to time served as a part-time instructor at State University of New
York at Buffalo and is currently a Director and Treasurer of People, Inc. and a
member of the Loan Committee, Erie County Regional Industrial Development
Corporation.
Other Executive Officers
Peter Pugielli, 50, has served as Senior Vice President, Treasurer and
Chief Financial Officer of the Company since September, 1993. He was hired by
the Company in December, 1989, as Vice President and Chief Financial Officer.
His responsibilities also include management of the Company's information
systems.
Daniel J. Altiere, 59, has been a Senior Vice President of the Company
since April, 1989. Since 1989, he has been responsible for human resources,
quality control, manufacturing, warranty service and industrial engineering.
Norman A. Westcott, 57, has been Vice President of the Company since he
joined the Company in July, 1994. He is responsible for material purchasing and
production. From 1985 until he joined the Company, he served as Vice President
of Operations with Tecma Maquila Services, Juarez, Mexico, a contract
manufacturer/assembler of various products, primarily for United States
companies.
Meetings of the Board of Directors; Committees
During the year ended December 31, 1997, there were eight meetings of
the Company's Board of Directors and each Director attended (either in person or
via teleconference) at least 75% of the meetings held. The Board of Directors
has three standing committees: the Audit Committee, the Compensation Committee
and the 1996 Director Option Plan Committee.
Audit Committee. The Audit Committee is currently comprised of James F.
Williams, John E. Dwight and Robert B. Mayer, of whom Messrs. Williams and Mayer
are non-employee Directors. The Audit Committee is responsible to make
recommendations concerning the engagement of independent public accountants,
review the plans and results of the audit engagement with the independent public
accountants, approve professional services provided by the independent public
accountants, review the independence of the independent public accountants,
consider the range of audit and non-audit fees and review the adequacy of the
Company's internal accounting controls. This committee held two meetings during
1997, all of which were attended by each committee member.
Compensation Committee. The Compensation Committee is currently
comprised of James F. Williams and Robert B. Mayer, both of whom are
non-employee Directors. The Compensation Committee is responsible to determine
compensation for the Company's executive officers and to administer the
Company's stock option plans, except for the 1996 Director Option Plan. This
committee held four meetings during 1997, all of which were attended by each
committee member.
1996 Director Option Plan Committee. The 1996 Director Option Plan
Committee is currently comprised of James A. Luksch and Robert J. Palle, Jr.
This committee is currently responsible for the administration of the Company's
1996 Director Option Plan. This committee did not meet during 1997.
Directors' Compensation
During calendar year 1997, each non-employee Director of the Company
(other than James H. Williams) received an annual retainer of $10,000, payable
quarterly, a fee of $1,000 for each Board meeting attended in person ($500 if
attendance was telephonic) and a fee of $600 for each committee meeting attended
in person ($300 if attendance was telephonic) if on a date other than the date
of a Board meeting. Each Director was also reimbursed for certain travel,
lodging and related expenses incurred in connection with attendance at Board and
committee meetings. During calendar year 1997, neither Mr. Luksch nor Mr. Palle
received any separate compensation for serving on the Board of Directors or any
committees thereof.
4
<PAGE>
During December, 1997, the Board of Directors determined that,
effective January 1, 1998, the annual retainer paid to non-employee Directors
would be increased from $10,000 to $15,000, and that if non-employee Directors
attended a committee meeting on the same day as a Board meeting, they would
receive a committee meeting fee at the teleconference rate.
In January, 1995, the Company entered into a consulting and
non-competition agreement with James H. Williams for the purpose of obtaining
advice and counseling concerning strategic planning and financial and business
matters. Under this agreement, Mr. Williams is obligated to make himself
available to the Company for up to 25 hours per month, in addition to time spent
attending to his duties as a member of the Board of Directors of the Company.
Mr. Williams is currently paid $130,182 per year for his services under this
agreement, subject to adjustment on a basis consistent with adjustments to
compensation to the Company's senior management. The agreement provides a cap of
$150,000 on payments to be made thereunder during any calendar year. The
agreement terminates on December 31, 1999. Payments to Mr. Williams under this
consulting agreement are in lieu of any other payments in connection with his
services as a Director or committee member, other than the reimbursement of
certain travel, lodging and related expenses incurred in connection with
attendance at Board and committee meetings.
In December, 1995, the stockholders of the Company approved the
adoption of the Company's 1996 Director Option Plan (the "1996 Plan"). Under the
1996 Plan, Directors who within the preceding 12 months have not been employed
by the Company and have not served as a consultant to the Company where annual
compensation exceeds $100,000, are eligible to receive options to purchase 500
shares of the Company's Common Stock for each year of service on the Board. The
exercise price for such shares is the fair market value thereof on the date of
grant (which is December 31 of each year) and the options are subject to a
one-year vesting requirement. The options become exercisable, in whole or in
part, during the second through sixth years from the date of grant. Under the
1996 Plan the grant of options is automatic to each eligible Director serving on
December 31 of any year provided the Director had served in such capacity since
June 30 of such year. A maximum of 25,000 shares may be awarded under the 1996
Plan which expires January 2, 2006. The plan is administered by a committee
presently comprised of James A. Luksch and Robert J. Palle, Jr.
During October, 1997, subject to stockholder approval, the Board of
Directors amended the 1996 Plan to provide that it would be administered by the
Board of Directors rather than the 1996 Plan Committee, and that rather than
providing for annual automatic grants of options for a specified number of
shares to all non-employee Directors, the Board would have the power to grant
options to non-employee Directors at its discretion from time to time to
purchase the number of shares of Common Stock determined by the Board; provided,
however, that no Director would be permitted to receive options to purchase more
than 2,000 shares of Common Stock in any one calendar year. Following such
amendments, the Board conditionally granted options to purchase 2,000 shares of
Common Stock to each of James F. Williams and Robert C. Mayer under the 1996
Plan, subject to stockholder approval of the amendments to the 1996 Plan.
During December, 1997, the Board of Directors adopted the Amended and
Restated 1996 Director Option Plan (the "Amended 1996 Plan") subject to
stockholder approval. The Amended 1996 Plan incorporates the amendments to the
1996 Plan the Board had approved in October, 1997, as well as certain additional
amendments, and restates the 1996 Plan as amended. Under the Amended 1996 Plan,
Directors who are not currently employed by the Company or any subsidiary of the
Company and have not been so employed within the preceding 6 months are eligible
to receive options from time to time to purchase the number of shares of Common
Stock determined by the Board; provided, however, that no Director is permitted
to receive options to purchase more than 5,000 shares of Common Stock in any one
calendar year. The exercise price for such shares is the fair market value
thereof on the date of grant, and the options vest as determined in each case by
the Board of Directors. Options granted under the Amended 1996 Plan must be
exercised within 10 years from the date of grant. A maximum of 100,000 shares of
Common Stock are subject to issuance under the Amended 1996 Plan. The plan will
be administered by the Board of Directors. Also subject to stockholder approval
and in keeping with the terms of the Amended 1996 Plan, in 1997 no Director
received the grant of an option to purchase 500 shares of Common Stock at year
end provided for in the original 1996 Plan.
5
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission and the American Stock Exchange, initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, Directors and greater than ten
percent stockholders (collectively, "Reporting Persons") are additionally
required to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations of the
Reporting Persons that no other reports were required with respect to fiscal
1997, all Section 16(a) filing requirements applicable to the Reporting Persons
were complied with on a timely basis in fiscal 1997.
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of February 10, 1998 by (i) each
person who is known by the Company to beneficially own more than five percent of
the Company's Common Stock, (ii) each of the Company's Directors, including
nominee Directors, (iii) each of the executive officers named in the Summary
Compensation Table and (iv) all executive officers and Directors as a group.
Except as otherwise indicated, the persons named in the table have sole voting
and investment power with respect to all shares beneficially owned, subject to
community property laws where applicable.
<TABLE>
<CAPTION>
Percent of
Class
Name and Address of Amount and Nature of Beneficially
Beneficial Owner(1)(2) Beneficial Ownership(1) Owned
---------------------- ----------------------- ------------
<S> <C> <C>
James A. Luksch.............................................. 1,994,112(3) 24.2%
Robert J. Palle, Jr.......................................... 1,251,671(4) 15.2%
John E. Dwight............................................... 23,350(5) *
Peter Pugielli............................................... 22,351(6) *
Daniel J. Altiere............................................ 17,151(6) *
Norman A. Westcott........................................... 17,151(6) *
James H. Williams............................................ 2,078,025(7) 25.2%
James F. Williams............................................ 57,673(7) *
Gary P. Scharmett............................................ 13,300(8) *
Robert B. Mayer.............................................. 1,700(9) *
Robert E. Heaton............................................. 0 *
All Directors and executive officers as a group
(11 persons)............................................... 5,419,311 65.1%
</TABLE>
- ----------------
* Less than 1%
(1) Beneficial ownership as of February 10, 1998 for each individual includes
shares subject to options held by such persons (but not held by any other
person) which are exercisable within 60 days after such date. Beneficial
ownership is determined in accordance with the rules of the Commission and
generally includes voting or investment power with respect to securities.
This table contains information furnished to the Company by the respective
stockholders or contained in filings made with the Commission.
(2) The address for each beneficial owner is c/o Blonder Tongue Laboratories,
Inc. One Jake Brown Road, Old Bridge, NJ 08857.
(3) Includes 8,334 shares of Common Stock underlying options granted by the
Company which are presently exercisable and 9 shares of Common Stock owned
by the Estate of Herbert M. Luksch, the executor of which is James A.
Luksch.
(4) Includes 7,834 shares of Common Stock underlying options granted by the
Company which are presently exercisable.
(5) Includes 8,350 shares of Common Stock underlying options granted by the
Company which are presently exercisable.
(6) Includes 17,151 shares of Common Stock underlying options granted by the
Company which are presently exercisable.
(7) James H. Williams has granted to James F. Williams the option to purchase
57,173 shares of Company Common Stock which he owns. These shares are
included in the beneficial ownership of both Directors. Beneficial ownership
for James F. Williams also includes 500 shares of Common Stock underlying
options granted by the Company which are presently exercisable.
(8) Includes 10,000 shares of Common Stock underlying options granted by the
Company which are presently exercisable and 1,500 shares of Common Stock
held of record by a corporation wholly-owned by Mr. Scharmett's spouse.
(9) Includes 500 shares of Common Stock underlying options granted by the
Company which are presently exercisable, 500 shares of Common Stock held of
record by Mr. Mayer's adult son, as to which Mr. Mayer expressly disclaims
beneficial ownership and 200 shares of Common Stock held of record by Mr.
Mayer's spouse.
7
<PAGE>
EXECUTIVE COMPENSATION
Summary
The following table sets forth certain summary information concerning
compensation paid or accrued for services rendered to the Company in all
capacities for the year ended December 31, 1997 and two prior fiscal years with
respect to the Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company who served as executive officers
during 1997 and whose salary plus bonus during 1997 exceeded $100,000.
Summary Compensation Table(1)
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
-------------------------------------- ------------
Other Securities
Name and Annual Underlying All Other
Principal Position Year Salary($) Bonus($)(2) Compensation($)(3) Options(#) Compensation($)(4)
------------------ ---- --------- ----------- ------------------ ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
James A. Luksch........................ 1997 311,454 264,364 --- --- 17,628
President and Chief Executive 1996 239,652 523,580(5) --- 25,000 12,501
Officer 1995 187,922 707,885(5) --- --- 10,024
Robert J. Palle, Jr.................... 1997 242,063 205,921 --- --- 4,624
Executive Vice President and Chief 1996 186,202 --- --- 23,500 2,824
Operating Officer 1995 146,053 129,778 --- --- 2,231
Peter Pugielli......................... 1997 116,255 73,535 --- 10,000 2,257
Senior Vice President and Chief 1996 111,077 14,000 --- 10,000 1,553
Financial Officer 1995 104,461 12,000 --- 6,033 1,440
Daniel J. Altiere .................... 1997 125,808 80,342 --- 10,000 3,774
Senior Vice President 1996 121,173 14,000 --- 10,000 3,533
1995 107,567 12,000 --- 6,033 3,151
Norman A. Westcott..................... 1997 100,962 63,891 --- 10,000 2,070
Vice President 1996 93,077 11,000 --- 10,000 1,225
1995 86,370 5,000 --- 6,033 1,087
</TABLE>
- ------------------
(1) This table does not include columns for Restricted Stock Awards and
Long-Term Incentive Plan Payouts since the Company had no amounts to report
in either column.
(2) Bonus amounts for 1997 include bonuses earned by each individual under the
Company's Executive Officer Salary Bonus Plan based on the Company's
financial performance during 1997. These amounts will be paid to such
individuals during 1998.
(3) No amounts are listed for Other Annual Compensation because such
compensation did not exceed the lesser of $50,000 or 10% of the total salary
and bonus of the named executive officer.
(4) Represents reimbursement of life insurance premiums, matching contributions
paid by the Company under its 401(k) plan and, for 1997 only, costs of
individual tax returns prepared by the Company's independent public
accountants. The amounts paid in 1997 for life insurance were $14,128,
$2,549, $1,107, $1,849 and $1,395; for matching contributions under the
Company's 401(k) plan contributions were $2,375, $950, $950, $1,925 and $0;
and amounts paid for preparation of tax returns were $1,125, $1,125, $200,
$0 and $675 for Messrs. Luksch, Palle, Pugielli, Altiere and Westcott,
respectively. The amounts paid in 1996 for life insurance were $10,634,
$1,846, $599, $1,715 and $1,225 and for matching contributions under the
Company's 401(k) plan contributions were $1,867, $978, $954, $1,818 and $0
for Messrs. Luksch, Palle, Pugielli, Altiere and Westcott, respectively. The
amounts paid in 1995 for life insurance were $8,181, $1,385, $541, $1,547
and $1,087 and for matching contributions under the Company's 401(k) plan
contributions were $1,843, $846, $899, $1,604 and $0 for Messrs. Luksch,
Palle, Pugielli, Altiere and Westcott, respectively.
(5) Includes a special bonus of $523,580 and $540,905 paid in 1996 and 1995,
respectively, pursuant to a Special Bonus Agreement between Mr. Luksch and
the Company. Under this Agreement, the Company agreed to make three annual
special bonus payments to Mr. Luksch in May, 1994, 1995 and 1996, to
facilitate Mr. Luksch's purchase of Common Stock pursuant to a written
agreement entered into in July, 1993.
8
<PAGE>
Stock Options
The following table contains information concerning the grant of
options to purchase shares of Common Stock under the Company's 1995 Long Term
Incentive Plan to the named executive officers during the fiscal year ended
December 31, 1997.
Option Grants in Fiscal Year 1997
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------------
Potential Realizable
Value at Assumed
Percent of Annual Rates of
Number of Total Options Stock Price
Securities Granted to Appreciation for
Underlying Employees Exercise Option Term(3)
Options in Fiscal Price Expiration ----------------------
Name Granted(#)(1) 1997 Per Share($)(2) Date 5%($) 10%($)
---- ------------- ------------ --------------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
James A. Luksch......... --- 0% --- --- --- ---
Robert J. Palle, Jr..... --- 0% --- --- --- ---
Peter Pugielli.......... 10,000 4% 8.63 7/16/07 54,274 137,540
Daniel J. Altiere....... 10,000 4% 8.63 7/16/07 54,274 137,540
Norman A. Westcott...... 10,000 4% 8.63 7/16/07 54,274 137,540
</TABLE>
- -----------------------------
(1) All options vest and will become exercisable in lots of approximately
one-third of the total options granted on July 17 of 1998, 1999 and 2000.
(2) All options were granted at the estimated fair market value of the Common
Stock on the date of grant, as determined by the Compensation Committee of
the Board of Directors of the Company.
(3) Potential gains are net of the exercise price but before taxes associated
with the exercise. Amounts represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. The assumed 5% and 10% rates of stock price appreciation are provided
in accordance with the rules of the Commission and do not represent the
Company's estimate or projection of the future Common Stock price. Actual
gains, if any, on stock option exercises are dependent on the future
financial performance of the Company and overall market conditions.
Option Exercises and Holdings
The following table provides information with respect to the named
executive officers concerning the exercise of options during fiscal year 1997
and unexercised options held as of December 31, 1997.
Aggregated Option Exercises in 1997
and Option Values as of December 31, 1997
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options at Options at
Acquired December 31, 1997(#) December 31, 1997($)(1)
on Value --------------------------- ---------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James A. Luksch......... --- --- 8,334 16,666 29,982 59,956
Robert J. Palle, Jr..... --- --- 7,834 15,666 28,183 56,358
Peter Pugielli.......... --- --- 17,151 20,688 172,241 125,618
Daniel J. Altiere....... --- --- 17,151 20,688 172,241 125,618
Norman A. Westcott...... --- --- 17,151 20,688 172,241 125,618
</TABLE>
- -----------
(1) These columns represent the difference on December 31, 1997 between the
closing market price of the Company's common stock and the option exercise
price.
9
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors currently consists
of James F. Williams and Robert B. Mayer. No member of the Compensation
Committee was an officer or employee of the Company during fiscal year 1997.
John E. Dwight, a former member of the Compensation Committee, resigned from
such position simultaneously with being elected as a Senior Vice President of
the Company in September, 1997. None of the executive officers of the Company
has served on the board of directors, the compensation committee or any other
board committee performing equivalent functions of any other entity, any of
whose officers served either on the Board of Directors or the Compensation
Committee of the Company.
Employment Contracts
In August 1995, Mr. Altiere and the Company entered into an employment
agreement which provides that Mr. Altiere is entitled to receive his base salary
for one year following termination of his employment by the Company without
cause. Upon his disability, Mr. Altiere is also entitled to receive his base
annual salary for one year.
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION POLICIES
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. The objective of the Company
in setting executive compensation has been to attract, retain and motivate
qualified executives to manage the Company's business and affairs so as to
foster sales and earnings growth, achieve significant current profits and
maximize stockholder value. Executive compensation in the aggregate is made up
principally of annual base salary, bonus, and awards of stock options under the
Company's 1994 Incentive Stock Option Plan and/or 1995 Long Term Incentive Plan.
Generally, annual salary adjustments and bonuses for executive officers
other than Messrs. Luksch and Palle have been established by Mr. Luksch with the
concurrence of the Compensation Committee. The annual salary adjustments and
bonuses for Messrs. Luksch and Palle are determined by the Compensation
Committee, subject to Board approval. An annual performance evaluation of each
executive officer is conducted, upon which a salary adjustment is determined.
The performance evaluation focuses on the executive's performance during the
past year of the responsibilities of his position, the executive's improvement
in areas where any deficiencies may have been noted in the past, and the
executive's achievement of any specific goals and objectives which may have been
established for such executive, including achievement of budget objectives. The
Company's overall profit for the fiscal year and the executive's individual
contribution to that profit are also considered at year end when bonuses are
determined. As is typical for most corporations, the assessment of individual
performance contributions is in most cases subjective and not conditioned upon
the achievement of any specific, pre-determined performance targets.
In February, 1997, the Compensation Committee implemented the Executive
Officer Salary Bonus Plan ("Executive Bonus Plan"). The Compensation Committee
believes that a combination of base salary, the Executive Bonus Plan and the
award of stock options and/or restricted stock awards will support the
short-term and long-term strategic objectives of the Company and will reward
individual performance and the value created for stockholders. Cash bonus awards
under this new bonus plan will be paid commencing in 1998, based upon and
relating to the financial performance of the Company during the 1997 fiscal
year. During the first quarter of each fiscal year of the Company, the
Compensation Committee will designate which of the Company's executive officers
are to participate in the Executive Bonus Plan for that year. Also during the
first quarter, the Compensation Committee will establish one or more objective
performance goals for each participant, together with a maximum dollar bonus
opportunity for the participant and a formula to determine bonus payments based
on the achievement of the goal(s). In no event may the bonus for any participant
exceed 100% of such participant's base salary.
10
<PAGE>
The performance goals will be expressed in terms of (a) one or more
corporate or divisional earnings-based measures (which may be based on net
income, operating income, cash flows, or any combination thereof) and/or (b) one
or more corporate or divisional sales-based measures. Each such goal may be
expressed on an absolute and/or relative basis, may employ comparisons with past
performance of the Company (including one or more divisions) and/or the current
or past performance of other companies, and in the case of earnings-based
measures, may employ comparisons to capital, stockholders' equity and shares
outstanding. Performance goals need not be uniform among participants.
After the Company's financial results for a fiscal year have been
determined, the Compensation Committee will certify the level of performance
goal attainment and the potential bonus payment for each participant. The
Compensation Committee will have full authority to reduce the amount that would
otherwise be payable to any participant for a fiscal year.
For 1997, bonuses under the Executive Bonus Plan were only to be
awarded if the Company's earnings from operations in 1997 were at least equal to
120% of its earnings from operations in 1996. Each of the named executive
officers in the Summary Compensation Table herein was a participant in the
Executive Bonus Plan during 1997. Bonuses earned during the 1997 fiscal year
under the Executive Bonus Plan (included as bonuses earned during 1997 in the
Summary Compensation Table herein but payable in 1998) were based on a
percentage of each recipient's annual salary for 1997 equal to the percentage
increase in the Company's earnings from operations for fiscal 1997 over fiscal
1996 multiplied by a multiplier between 1.0 and 1.5 determined on an individual
basis by the Compensation Committee, subject to a maximum amount equal to 100%
of such recipient's 1997 annual salary.
Compensation of the Chief Executive Officer
Mr. Luksch has been President and Chief Executive Officer of the
Company since it commenced operations in 1989. His compensation includes the
same elements and performance measures as the compensation of the Company's
other executive officers.
Mr. Luksch's annual salary for fiscal year 1997 remained at $311,000
since being increased to such amount during September, 1996, in connection with
the termination of the Company's 1989 Key Employee Salary Bonus Plan (the "1989
Bonus Plan"). The increase to Mr. Luksch's salary during 1996 was made in lieu
of his receiving any bonus under the 1989 Bonus Plan during 1996. During 1997,
Mr. Luksch also earned a bonus of $264,364 under the Company's Executive Bonus
Plan, which will be paid during fiscal 1998. Mr. Luksch's bonus under the
Executive Bonus Plan was determined by awarding him a percentage of his 1997
annual salary equal to the percentage increase in the Company's earnings from
operations for fiscal 1997 over fiscal 1996 (provided 1997 earnings amounted to
at least 120% of 1996 earnings), and multiplying such amount by 1.5, subject to
a maximum of 100% of Mr. Luksch's annual salary. Mr. Luksch received no stock
options during fiscal year 1997. The Committee believes that Mr. Luksch's
overall compensation is fair and reasonable. This assessment is a subjective
determination and is not quantitatively related to the Company's performance.
The Compensation Committee
James F. Williams
Robert B. Mayer
11
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total return during the period
from December 14, 1995, the date of the Company's initial public offering, to
December 31, 1997, for the Company's Common Stock, the AMEX Market Value Index
and the Dow Jones Electrical Components & Equipment Industry Group Index. This
graph assumes the investment of $100 in the Company's Common Stock, the stock in
the companies presented in the AMEX Market Value Index and the stock in the
companies comprising the Dow Jones Electrical Components & Equipment Industry
Group Index on December 14, 1995 and the reinvestment of all dividends.
[IN THE PRINTED VERSION THERE APPEARS A LINE GRAPH
WHICH DEPICTS THE PLOT POINTS OUTLINED BELOW:]
12/14/95 12/31/95 12/31/96 12/31/97
- -o- $100 -o- $102.05 -o- $122.41 -o- $148.10
- -+- $100 -+- $102.63 -+- $ 92.10 -+- $149.25
- -*- $100 -*- $101.94 -*- $108.45 -*- $127.28
- --------------------------------------------------------------------------------
-o- DJEI -*- AMEX -+- BDR
- --------------------------------------------------------------------------------
CERTAIN TRANSACTIONS
Employment of Family Members. Since 1995, the Company has employed the
President's daughter and son-in-law, Emily Nikoo and Nezam Nikoo, as senior
engineers in the engineering department. The annual compensation for Mr. Nikoo
in 1997 was $69,797. The annual compensation for Mrs. Nikoo was $46,194. In
1997, Mr. Nikoo was granted options under the 1995 Plan to purchase 5,000 shares
of Common Stock at a price of $8.63 per share, vesting over three years at
one-third per year, commencing on July 17, 1998. In 1997, Mrs. Nikoo was granted
options under the 1995 Plan to purchase 4,000 shares of Common Stock at a price
of $8.63 per share, vesting over three years at one-third per year, commencing
on July 17, 1998.
Loans from Stockholders. On December 19, 1995, Messrs. Luksch, Palle
and James H. Williams, lent to the Company $1,591,000 in the aggregate from S
Corporation distributions actually made to such stockholders upon consummation
of the Company's initial public offering of Common Stock. Mr. Williams lent
$1,263,000, Mr. Luksch lent $12,000, and Mr. Palle lent $316,000. These loans
were unsecured and subordinated to other bank debt of the Company. The loans had
a term of three years, with interest paid monthly and no amortization of
principal prior to maturity, subject to prepayment. The interest rate on the
loans equalled the floating rate charged to the Company on its line of credit by
CoreStates Bank, N.A. In 1997, the Company made payments (including prepayments)
on the promissory notes to Messrs. Luksch, Palle and Williams in the respective
amounts of $1,027, $86,857 and $346,959. All of such notes were repaid in full
by the Company in January, 1998.
12
<PAGE>
PROPOSAL NO. 2 - AMENDMENT OF 1995 LONG TERM INCENTIVE PLAN
At the Annual Meeting, stockholders will be presented with a proposal
to increase the number of shares subject to the Company's 1995 Long Term
Incentive Plan, as heretofore amended (the "1995 Plan"), by 250,000 shares.
Previously, stockholders have approved a total of 500,000 shares of Common Stock
for issuance under the 1995 Plan. Options to purchase a total of 480,000 shares
of Common Stock (not including conditionally granted stock options) at exercise
prices ranging from $8.63 to $12.69 per share have been granted under the 1995
Plan as of February 10, 1998. No restricted shares have been awarded under the
1995 Plan. The full text of the proposed amendment to the 1995 Plan is set forth
in Appendix A to this Proxy Statement. The foregoing description of such
proposed amendment is qualified in its entirety by reference to the text of
Appendix A hereto.
The Board of Directors has historically sought to employ the 1995 Plan
as a long-term incentive for its management and employees to enhance stockholder
value. Because options granted under the 1995 Plan are generally granted at fair
market value of the Common Stock on the date of grant, any value which
ultimately accrues to optionees from such options is based entirely on the
Company's performance following the date of grant, as perceived by stockholders
who establish the price for the Company's shares. The proposed amendment
increasing the number of shares subject to the 1995 Plan will permit further
grants under such plan, thereby allowing the Company to continue creating
incentives for its management and employees to enhance stockholder value.
Accordingly, the Board of Directors believes it is in the best interests of the
Company and its stockholders to amend the 1995 Plan as described above.
Following the approval of the amendment to the 1995 Plan described
above, but subject to stockholder approval, the Board of Directors conditionally
granted options to purchase an aggregate of 30,000 shares of Common Stock at
exercise prices ranging from $12.69 to $15.13 per share to certain individuals.
The table below summarizes these conditionally granted stock options and
provides other information as to the persons to whom such stock options were
granted. The remaining shares of Common Stock which approval of this Proposal
No. 2 would make subject to the 1995 Plan will be used to make additional grants
of stock options from time to time to persons eligible to receive such options.
New Plan Benefits
1995 Long Term Incentive Plan, as Amended
<TABLE>
<CAPTION>
Number of Shares Underlying
Options Granted Subject Option Exercise
Name and Position to Stockholder Approval(#)(1) Price Per Share($)
- ----------------- ------------------------------- -------------------
<S> <C> <C>
John E. Dwight 20,000(2) $12.69
Senior Vice President
and Director
Executive Group 20,000 $12.69
Non-Executive Officer Employee 10,000(3) $15.13
Group
</TABLE>
- ----------------
(1) These stock options were granted by the Board of Directors subject to
stockholder approval of Proposal No. 2 to increase the number of shares
eligible for issuance under the 1995 Plan. The stock options expire 10 years
from the date of grant.
(2) These stock options vest and become exercisable, subject to stockholder
approval, in eight substantially equal annual installments, with the first
installment vesting on the date of grant.
(3) These stock options vest and become exercisable, subject to stockholder
approval, in three substantially equal annual installments on the first,
second and third anniversaries of the date of grant.
13
<PAGE>
Summary Description of the 1995 Plan
The 1995 Plan was adopted by the Board of Directors and stockholders on
October 3, 1995. It provides for grants of "incentive stock options" or
nonqualified stock options, and awards of restricted stock, to executives and
key employees, including officers and employee Directors. The 1995 Plan is
administered by the Compensation Committee of the Board of Directors, which
determines the optionees and the terms of the options granted under the 1995
Plan, including the exercise price, number of shares subject to the option and
the exercisability thereof, as well as the recipients and number of shares
awarded for restricted stock awards; provided, however, that no employee may
receive stock options or restricted stock awards which would result, separately
or in combination, in the acquisition of more than 100,000 shares of Common
Stock of the Company under the 1995 Plan. The exercise price of incentive stock
options granted under the 1995 Plan must be equal to at least the fair market
value of the Common Stock on the date of grant. With respect to any optionee who
owns stock representing more than 10% of the voting power of all classes of the
Company's outstanding capital stock, the exercise price of any incentive stock
option must be equal to at least 110% of the fair market value of the Common
Stock on the date of grant, and the term of the option may not exceed five
years. The term of all other incentive stock options granted under the 1995 Plan
may not exceed ten years. The aggregate fair market value of Common Stock
(determined as of the date of the option grant) for which an incentive stock
option may for the first time become exercisable in any calendar year may not
exceed $100,000. The exercise price for nonqualified stock options is
established by the Compensation Committee, and may be more or less than the fair
market value of the Common Stock on the date of grant.
Generally, options granted under the 1995 Plan are exercisable over the
term of the option, depending upon the optionee's years of service with the
Company at the time of grant, as provided by the Compensation Committee. Upon
any merger or consolidation, if the Company is not the surviving corporation,
all outstanding options granted shall terminate unless such options are assumed
or other options are substituted therefor by the successor corporation, or the
vesting of such shares is accelerated by the Compensation Committee.
Under the 1995 Plan awards may be made to key executive employees of
restricted stock which is forfeitable unless the employee remains in the employ
of the Company for five years and does not violate other terms of the award,
such as non-transferability. Exceptions to forfeiture are provided for the cases
of retirement at age 65 or death while in employment.
The Board of Directors may, upon recommendation of the Compensation
Committee and without stockholder approval, terminate the 1995 Plan at any time
or modify the 1995 Plan to make certain administrative changes, such as changes
imposed by changing tax laws. The Board of Directors may not, without
stockholder approval, increase the total number of shares of Common Stock
subject to the 1995 Plan, change the class of persons eligible to receive grants
under the 1995 Plan or increase the benefits accruing to persons granted options
or restricted stock awards under the 1995 Plan.
Federal Income Tax Consequences Relating to the 1995 Plan
The federal income tax consequences of an employee's participation in
the 1995 Plan are complex and subject to change. The following discussion is
only a summary of the general rules applicable to the 1995 Plan. All
participants have been and are encouraged to consult their own tax advisors
since a taxpayer's particular situation may be such that some variation of the
rules described below will apply.
Incentive Stock Options. If an option granted under the 1995 Plan is
treated as an incentive stock option, the optionee will not recognize any income
upon either the grant or the exercise of the option, and the Company will not be
allowed a deduction for federal tax purposes. Upon a sale of the shares, the tax
treatment to the optionee and the Company will depend primarily upon whether the
optionee has met certain holding period requirements at the time he or she sells
the shares. In addition, as discussed below, the exercise of an incentive stock
option may subject the optionee to alternative minimum tax liability.
14
<PAGE>
If an optionee exercises an incentive stock option and does not dispose
of the shares received within two years after the date of such option or within
one year after the transfer of the shares to him or her, any gain realized upon
the disposition will be characterized as a long-term capital gain and, in such
case, the Company will not be entitled to a federal tax deduction.
If the optionee disposes of the shares either within two years after
the date the option is granted or within one year after the transfer of the
shares to him or her, such disposition will be treated as a disqualifying
disposition and an amount equal to the lesser of (1) the fair market value of
the shares on the date of exercise minus the purchase price, or (2) the amount
realized on the disposition minus the purchase price, will be taxed as ordinary
income to the optionee in the taxable year in which the disposition occurs.
(However, in the case of gifts, sales to related parties, and certain other
transactions, the full difference between the fair market value of the stock and
the purchase price will be treated as compensation income). The excess, if any,
of the amount realized upon disposition over the fair market value at the time
of the exercise of the option will be treated as a long-term capital gain if the
shares have been held for more than one year following the exercise of the
option.
The exercise of an incentive stock option may subject an optionee to
alternative minimum tax liability because the excess of the fair market value of
the shares at the time an incentive stock option is exercised over the purchase
price of the shares is included in income for purposes of the alternative
minimum tax even though it is not included in taxable income for purposes of
determining the regular tax liability of an employee. Consequently, an optionee
may be obligated to pay alternative minimum tax in the year he or she exercises
an incentive stock option.
In general, there will be no federal income tax deductions allowed to
the Company upon the grant, exercise or termination of an incentive stock
option. However, in the event an optionee sells or disposes of stock received on
the exercise of an incentive stock option in a disqualifying disposition, the
Company will be entitled to a deduction for federal income tax purposes in an
amount equal to the ordinary income, if any, recognized by the optionee upon
disposition of the shares, provided that the deduction is not otherwise
disallowed under the Internal Revenue Code of 1986, as amended ("Code").
Nonqualified Stock Options. Nonqualified stock options granted under
the 1995 Plan do not qualify as "incentive stock options" and will not qualify
for any special tax benefits to the optionee. An optionee generally will not
recognize any taxable income at the time he or she is granted a nonqualified
option. However, upon its exercise, the optionee will recognize ordinary income
for federal tax purposes measured by the excess of the then fair market value of
the shares over the exercise price. The income realized by the optionee will be
subject to income and other employee withholding taxes.
The optionee's basis for determination of gain or loss upon the
subsequent disposition of shares acquired upon the exercise of a nonqualified
stock option will be the amount paid for such shares plus any ordinary income
recognized as a result of the exercise of such option. Upon disposition of any
shares acquired pursuant to the exercise of a nonqualified stock option, the
difference between the sale price and the optionee's basis in the shares will be
treated as a capital gain or loss and generally will be characterized as a
long-term capital gain or loss if the shares have been held for more than one
year at their disposition.
In general, there will be no federal income tax deduction allowed to
the Company upon the grant or termination of a nonqualified stock option or a
sale or disposition of the shares acquired upon the exercise of a nonqualified
stock option. However, upon the exercise of a nonqualified stock option, the
Company will be entitled to a deduction for federal income tax purposes equal to
the amount of ordinary income that an optionee is required to recognize as a
result of the exercise, provided that the deduction is not otherwise disallowed
under the Code.
Restricted Stock Awards. Generally, the grant of a restricted stock
award does not immediately produce taxable income to a recipient or a tax
deduction to the Company. At the time the restrictions and conditions expire,
however, a recipient will recognize ordinary income in an amount equal to the
fair market value of the shares on the date the restrictions and conditions
expire and the Company will be entitled to a corresponding income tax deduction.
A recipient who elects under Section 83(b) of the Code within 30 days after the
date of the grant,
15
<PAGE>
however, will have ordinary income on the date of the grant equal to the fair
market value on that date of the shares of restricted stock as if the shares
were unrestricted and could be sold immediately. With respect to the sale or
exchange of shares after the restrictions have expired, the holding period to
determine whether the recipient has a long-term or short-term capital gain or
loss will commence on the date the restrictions expire. If the recipient makes a
timely election pursuant to Section 83(b) of the Code, to be taxed as of the
date of the grant, the holding period will commence on the date of the grant and
the tax basis will be equal to the fair market value of the shares on the date
of grant as if the shares were unrestricted and could be sold immediately. If no
election has been made under Section 83(b) of the Code, any dividends received
from the restricted stock while the restrictions are in effect will be taxed as
additional compensation, and the Company will be entitled to a corresponding
compensation deduction. Otherwise, dividends paid on restricted stock will be
taxed to the recipient at ordinary income rates and will not be deductible by
the Company.
Recommendation of the Board of Directors Concerning the Proposed Amendment of
the 1995 Plan
The Board of Directors of the Company recommends that stockholders vote
FOR the proposal to amend the 1995 Plan to increase the number of shares
available for issuance thereunder from 500,000 shares to 750,000 shares. Proxies
received by the Board of Directors will be so voted unless stockholders specify
in their proxies a contrary choice.
PROPOSAL NO. 3 - ADOPTION OF AMENDED AND RESTATED
1996 DIRECTOR OPTION PLAN
Introduction
In December, 1995, the stockholders of the Company adopted the 1996
Director Option Plan (the "1996 Plan"). The 1996 Plan provides for an automatic
grant on December 31 of each year of a nonqualified stock option to purchase 500
shares of the Company's Common Stock to all Directors who have served in such
position since at least June 30 of that year, and who are not currently and have
not been employed by the Company or received annual consultant compensation
exceeding $100,000 within the last 12 months. The exercise price for such
options is the fair market value of the Common Stock on the date of grant, and
the options are subject to a one year vesting requirement. The options become
exercisable in full during the second through sixth years from the date of
grant. The 1996 Plan is administered by the 1996 Director Option Plan Committee
(the "1996 Plan Committee"), made up of members of the Board of Directors not
entitled to receive options under the plan. The Board of Directors may, upon
recommendation of the 1996 Plan Committee and without stockholder approval,
terminate the 1996 Plan at any time or modify the 1996 Plan to make certain
administrative changes, such as changes imposed by changing tax laws. The Board
of Directors may not, without stockholder approval, increase the total number of
shares of Common Stock subject to the 1996 Plan, change the class of persons
eligible to receive grants under the 1996 Plan, increase the benefits accruing
to persons granted options under the 1996 Plan or continue the 1996 Plan in
effect beyond January 2, 2006, its normal termination date. A maximum of 25,000
shares of Common Stock may be issued pursuant to options granted under the 1996
Plan. Options to purchase a total of 1,500 shares of Common Stock (not including
conditionally granted stock options) at an exercise price of $8.50 per share
have been granted under the 1996 Plan as of February 10, 1998.
The purpose of the 1996 Plan is to advance the interests of the Company
and its stockholders by enabling the Company to attract and retain the services
of experienced and knowledgeable non-employee directors and to provide an
incentive to such Directors to promote the long-term success of the Company and
maximize stockholder value.
During October, 1997, subject to stockholder approval, the Board of
Directors amended the 1996 Plan to provide that it would be administered by the
Board of Directors instead of the 1996 Plan Committee, and that rather than
providing for annual automatic grants of options for a specified number of
shares to all non-employee Directors, the Board would have the power to grant
options to non-employee Directors at its discretion from time to time to
purchase the number of shares of Common Stock determined by the Board; provided,
however, that no Director would be permitted to receive options to purchase more
than 2,000 shares of Common Stock in any one
16
<PAGE>
calendar year. Following such amendments, the Board conditionally granted
options to purchase an aggregate of 4,000 shares of Common Stock to certain
non-employee Directors of the Company at an exercise price of $16.94 per share,
subject to stockholder approval. The table below summarizes these conditionally
granted stock options, and provides other information as to the persons to whom
such options were granted.
New Plan Benefits
1996 Director Option Plan, as amended
Number of Shares Underlying
Options Granted Subject Option Exercise
Name and Position to Stockholder Approval(#)(1(2) Price Per Share($)
- ----------------- ------------------------------ ------------------
James F. Williams 2,000 $16.94
Director
Robert B. Mayer 2,000 $16.94
Director
Non-Executive 4,000 $16.94
Director Group
- ----------------
(1) These stock options were granted by the Board of Directors subject to
stockholder approval of Proposal No. 3 to adopt the amendments to the 1996
Plan described herein. The stock options expire 10 years from the date of
grant.
(2) These stock options vest and become exercisable in full, subject to
stockholder approval, on the first anniversary of the date of grant.
During December, 1997, subject to stockholder approval, the Board of
Directors adopted the Amended and Restated 1996 Director Option Plan (the
"Amended 1996 Plan"). The Amended 1996 Plan incorporates the amendments to the
1996 Plan the Board had approved in October, 1997, as well as certain additional
amendments, and restates the 1996 Plan as amended. The terms of the Amended 1996
Plan are summarized below. The full text of the Amended 1996 Plan is set forth
in Appendix B to this Proxy Statement. The following summary description of the
Amended 1996 Plan is qualified in its entirety by reference to the actual text
of the Amended 1996 Plan.
Summary Description of the Amended 1996 Plan
The Amended 1996 Plan provides for an increase in the shares of Common
Stock issuable pursuant to stock options granted under the Plan from 25,000
shares to 100,000 shares. The plan provides for grants of nonqualified stock
options to Directors who are not currently and have not been employed by the
Company at any time within the last 6 months. The Amended 1996 Plan will be
administered by the Board of Directors, which will have the ability to determine
for each stock option granted, the optionee to receive the option and the terms
of the option, including the exercise price, number of shares subject to the
option, vesting schedule and exercise period; provided, however, that the
exercise price of stock options granted under the Amended 1996 Plan must be the
fair market value of the Common Stock on the date of grant; and provided
further, that no Director may be granted options to purchase more than 5,000
shares of Common Stock in any one calendar year.
Generally, options granted under the Amended 1996 Plan will be
exercisable over the term of the option, as provided by the Board of Directors.
No option granted under the Amended 1996 Plan may have a term of greater than 10
years. Upon any merger or consolidation, if the Company is not the surviving
corporation, all outstanding options granted shall terminate unless such options
are assumed or other options are substituted therefor by the successor
corporation, or the vesting of such shares is accelerated by the Board of
Directors.
The Board of Directors may, without stockholder approval, terminate the
Amended 1996 Plan at any time or modify the 1996 Plan to make certain
administrative changes, such as changes imposed by changing tax laws. The Board
of Directors may not, without stockholder approval, increase the total number of
shares of Common
17
<PAGE>
Stock subject to the Amended 1996 Plan, increase the benefits accruing to
persons granted options under the 1996 Plan or continue the 1996 Plan in effect
beyond January 2, 2006, its normal termination date.
Federal Income Tax Consequences Relating to the Amended 1996 Plan
For a summary of the federal income tax consequences of the grant and
exercise of the nonqualified stock options granted under the Amended 1996 Plan,
see the discussion in Proposal No. 2 under the heading "Federal Income Tax
Consequences Relating to the 1995 Plan -- Nonqualified Stock Options."
Recommendation of the Board of Directors Concerning the Adoption of the
Amended 1996 Plan
The Board of Directors of the Company recommends that stockholders vote
FOR the proposal to adopt the Amended 1996 Plan. Proxies received by the Board
of Directors will be so voted unless stockholders specify in their proxies a
contrary choice.
PROPOSAL NO. 4 - RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors of the Company, upon the recommendation of the
Audit Committee, has selected BDO Seidman, LLP to serve as independent auditors
of the Company for the fiscal year ending December 31, 1998. BDO Seidman, LLP
was the Company's independent auditors for the fiscal year ended December 31,
1997 and is considered by management of the Company to be well qualified. The
Company has been advised by that firm that neither it nor any member thereof has
any financial interest, direct or indirect in the Company or any of its
subsidiaries, in any capacity. One or more representatives of BDO Seidman, LLP
is expected to be present at this year's Annual Meeting of Stockholders with an
opportunity to make a statement if he or she desires to do so and to answer
appropriate questions with respect to that firm's examination of the Company's
financial statements and records for the fiscal year ended December 31, 1997.
Although the submission of the appointment of BDO Seidman, LLP is not
required by law or the By-Laws of the Company, the Board is submitting it to the
stockholders to ascertain their views. If the stockholders do not ratify the
appointment, the Board will not be bound to seek other independent auditors for
1998, but the selection of other independent auditors will be considered in
future years.
Recommendation of the Board Concerning the Ratification of Appointment of
Independent Auditors
The Board of Directors of the Company recommends that stockholders vote
FOR the ratification of the appointment of BDO Seidman, LLP as the Company's
independent auditors for the 1998 fiscal year. Proxies received by the Board of
Directors will be so voted unless stockholders specify in their proxies a
contrary choice.
OTHER BUSINESS
Management knows of no other matters that will be presented at the
Annual Meeting of Stockholders. However, if any other matter properly comes
before the meeting, or any adjournment or postponement thereof, it is intended
that proxies in the accompanying form will be voted in accordance with the
judgment of the persons named therein.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1999 Annual
Meeting of Stockholders must be received by the Company at One Jake Brown Road,
Old Bridge, New Jersey 08857 on or before January 7, 1999, to be eligible for
inclusion in the Company's proxy statement relating to that meeting.
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<PAGE>
FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1997 ACCOMPANIES THIS PROXY STATEMENT. THE COMPANY WILL
FURNISH TO EACH PERSON WHOSE PROXY IS BEING SOLICITED, UPON WRITTEN REQUEST, ANY
EXHIBIT DESCRIBED IN THE LIST ACCOMPANYING THE FORM 10-K, UPON THE PAYMENT, IN
ADVANCE, OF REASONABLE FEES RELATED TO THE COMPANY'S FURNISHING SUCH EXHIBIT(S).
REQUESTS FOR COPIES OF SUCH EXHIBIT(S) SHOULD BE DIRECTED TO GLENN ALEXANDER,
CONTROLLER, AT THE COMPANY'S PRINCIPAL ADDRESS AS SHOWN ON THE COVER PAGE OF
THIS PROXY STATEMENT.
By Order of the Board of Directors
James A. Luksch
Chairman of the Board, President
and Chief Executive Officer
Date: April 6, 1998
Old Bridge, New Jersey
19
<PAGE>
Appendix A
PROPOSED AMENDMENT TO
1995 LONG TERM INCENTIVE PLAN
SECOND AMENDMENT TO
BLONDER TONGUE LABORATORIES, INC.
1995 LONG TERM INCENTIVE PLAN
The Blonder Tongue Laboratories, Inc. 1995 Long Term Incentive Plan, as
heretofore amended (the "Plan"), is hereby amended as follows:
1. The first sentence of Section 3.1 of the Plan is hereby amended and
restated in its entirety as follows:
"Subject to adjustment pursuant to the provisions of Section 3.2
hereof, the number of shares of Stock of the Company which may be
issued and sold or awarded under the Plan shall not exceed 750,000
shares, of which shares issued and sold pursuant to Incentive Stock
Options under the Plan shall not exceed 725,000 and shares subject to
restricted stock awards may not exceed 25,000."
2. Ratification. Except as expressly set forth in this Second Amendment
to the Plan, the Plan is hereby ratified and confirmed without
modification.
3. Effective Date. The effective date of this Second Amendment to the
Plan shall be September 3, 1997.
A-1
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Appendix B
BLONDER TONGUE LABORATORIES, INC.
AMENDED AND RESTATED 1996 DIRECTOR OPTION PLAN
1. DEFINITIONS
As used herein, the following terms shall have the meanings hereinafter
set forth unless the context clearly indicates to the contrary:
1.1 "Agreement" - The agreement between the Company and the Optionee
under which the Optionee may purchase Stock pursuant to the Plan.
1.2 "Board" - The Board of Directors of the Company.
1.3 "Company" - Blonder Tongue Laboratories, Inc., a Delaware
corporation.
1.4 "Code" - The United States Internal Revenue Code of 1986, as from
time to time amended.
1.5 "Eligible Director" - Any person who is a member of the Board and
neither is currently, nor within the past six (6) months was employed by the
Company or any subsidiary of the Company.
1.6 "Fair Market Value" - The per share fair market value of the Stock
of the Company, determined by taking the mean average of the high and low
selling price as reported by the principal national exchange upon which such
shares are traded (or if not traded on a national exchange then the mean average
between the bona fide closing bid and ask prices) (the "Trading Price") on the
date of grant, or if none, by taking a weighted average of the means of the
Trading Price on the nearest trading date before and the nearest trading date
after the date of grant.
1.7 "Option" - An option to purchase Stock of the Company granted
pursuant to the provisions of the Plan. All Options shall be non-statutory stock
options within the meaning of the Code.
1.8 "Optionee" - The person to whom an Option has been granted pursuant
to the provisions of the Plan.
1.9 "Option Price" - The per share exercise price of the Stock with
respect to which an Option has been granted under the Plan.
1.10 "Plan" - The Company's Amended and Restated 1996 Director Option
Plan, the terms of which are set forth herein.
1.11 "Stock" - The common stock of the Company.
2. ESTABLISHMENT AND PURPOSE OF PLAN
2.1 Establishment and Purpose of Plan. The Company hereby establishes
the Plan for the purpose of encouraging equity ownership in the Company by
outside directors of the Company whose continued services are considered
essential to the Company's sustained progress, and thus to provide them with a
further incentive to continue as directors of the Company.
B-1
<PAGE>
2.2 Effective Date of Plan. The effective date of the Plan was
originally January 1, 1996. The Plan, as amended and restated herein, shall be
effective on December 18, 1997, subject to stockholder approval, with respect to
grants made on or after such date.
2.3 Expiration of the Plan. The Plan shall terminate at the close of
business on January 2, 2006, or such earlier date as the Board may determine
pursuant to Section 7 of the Plan, and no Option shall be granted after that
date.
3. STOCK SUBJECT TO PLAN
3.1 Limitations. Subject to adjustment pursuant to the provisions of
Section 3.2 hereof, the number of shares of Stock of the Company which may be
issued and sold under the Plan shall not exceed 100,000 shares.
3.2 Adjustments.
a. Anti-Dilution. If the outstanding shares of Stock of the
Company are hereafter changed or converted into or exchanged or exchangeable for
a different number or kind of shares or other securities of the Company or of
another corporation by reason of a reorganization, merger, consolidation,
recapitalization, reclassification, combination of shares, stock dividend, stock
split or reverse stock split, appropriate adjustment shall be made in the number
of shares and kind of stock which may be granted as provided in Section 3.1, and
subject to unexercised Options, to the end that the proportionate interest of
Optionee's shall be maintained as before the occurrence of such event.
b. Non-survival of Company. In the event of a dissolution or
liquidation of the Company or any merger or combination in which the Company is
not a surviving corporation, each outstanding Option granted hereunder shall
terminate, but the Optionee shall have the right, immediately prior to such
liquidation, dissolution, merger or combination, to exercise his Option, in
whole or in part, to the extent that such Option is then otherwise exercisable
and has not previously been exercised; provided, however, that in the event of
any such dissolution, liquidation, merger or combination, the Board may modify
any Options granted hereunder so as to accelerate as a consequence of such
transaction the Optionee's right to exercise any such Option.
c. Change of Control. In the event of any contemplated
transaction which may constitute a change of control of the Company, the Board
may modify any Options granted hereunder so as to accelerate, as a consequence
of such transaction, the Optionee's right to exercise any such Option. A Change
of Control is that change in control of the Company which is of a nature which
would be required to be reported to the Securities and Exchange Commission
pursuant to Schedule 14A of Regulation 14A or any successor provision (whether
or not the Company is then subject to such reporting requirements). A Change of
Control will be deemed to have occurred for purposes of this plan if any person,
other than persons or entities who on the date hereof are the "beneficial
owners" (as determined pursuant to Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934), directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the Company's then
outstanding securities, is or becomes the "beneficial owner" of 25% or more of
the combined voting power of the outstanding securities of the Company or if
during two consecutive year periods, the directors at the beginning of such
periods cease for any reason during the two-year period to constitute a majority
of the Board of Directors of the Company.
3.3 Effect of Exercise or Termination of Option. Shares of Stock with
respect to which an Option granted under the Plan shall have been exercised
shall not again be available for grant under the Plan. If Options granted under
the Plan shall terminate for any reason without being wholly exercised, new
Options may be granted under the Plan covering that number of shares of Stock
with respect to which such termination relates.
B-2
<PAGE>
4. ADMINISTRATION OF THE PLAN
4.1 Administration by the Board. Subject to the provisions of the Plan,
the Plan shall be administered by the Board.
4.2 Powers and Duties. The Board shall have sole discretion and
authority to determine the Eligible Directors to whom Options shall be granted.
Except as otherwise provided in the Plan, the Board shall have sole discretion
and authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, to determine the details and provisions of
each Agreement executed pursuant to the Plan, and to make all other
determinations necessary or advisable in the administration of the Plan.
4.3 Quorum and Majority Rule. A majority of the then members of the
Board shall constitute a quorum and any action taken by a majority present at a
meeting at which a quorum is present or any action taken without a meeting
evidenced by a writing executed by all of the members of the Board, as the case
may be, shall constitute the action of the Board.
4.4 Liability of the Board. No member of the Board shall be liable for
any action, determination or interpretation under any provision of the Plan or
otherwise if such action, determination or interpretation was done or made in
good faith by such member of the Board.
5. OPTIONS GRANTED UNDER THE PLAN
5.1 Grant of Options. Options shall be granted only to Eligible
Directors. An Eligible Director may be granted one or more Options; provided,
however, that no Eligible Director shall be granted Options to purchase more
than 5,000 shares of stock in any one calendar year. Each Option granted under
the Plan shall be evidenced by an Agreement dated as of the date such Option is
granted. The Agreement shall contain such terms and conditions as shall be
determined by the Board, consistent with the Plan.
5.2 Vesting. Each Option shall vest and be exercisable at such time or
times as determined by the Board on the date of grant.
5.3 Option Price. The Option Price of the Stock subject to each Option
shall be the Fair Market Value of the Stock on the date the Option is granted.
5.4 Option Exercise Period. The period during which any Option granted
under the Plan may be exercised shall be not more than ten years from the date
of grant, as determined by the Board, which period shall be set forth in the
Agreement.
5.5 Option Exercise. An Option granted pursuant to the Plan may be
exercised at any time or times, specified in the Agreement, prior to the
termination of the said Option by delivery by the Optionee of written notice to
the Company specifying the number of shares of Stock to be purchased accompanied
by full payment for such shares of Stock. The right of exercise shall be
cumulative. Full payment shall be in cash, or at the discretion of the Board,
a. the option price of any Option may be paid in shares of
Stock of the Company; or
b. the option price may be paid by withholding that number of
shares subject to the Option whose aggregate fair market value at the date of
exercise equals the Option Price. In addition, sufficient shares subject to the
Option (valued at the fair market value thereof at such date) may also be
withheld to pay any Federal, state or local tax due on account of the exercise
of the Option.
5.6 Termination of Option.
a. Termination of Service on the Board. Except as specifically
provided in Section 3.2(b) and Sections 5.6(b) and 5.6(c) hereof, the Options
granted hereunder shall terminate as of the close of
B-3
<PAGE>
business on the earliest to occur of the date of (i) expiration of the Option
Exercise Period provided in Section 5.4 hereof, (ii) an event of default or
breach by an Optionee of the terms and conditions of such Optionee's Agreement,
or (iii) termination of an Optionee's service on the Board for cause. If an
Optionee's service on the Board is terminated other than for cause, death (as
provided in subsection (b) below), or retirement or disability (both as provided
in subsection (c) below), the Optionee must exercise his Option, if at all and
only to the extent the option is exercisable at termination, within thirty six
months after the date of such termination, in accordance with the terms of the
Plan and the Agreement.
b. Death of Optionee. If an Optionee dies prior to the
exercise of his Option in full, his Option may be exercised by the Optionee's
executors, administrators or heirs within one year after the date of the
Optionee's death, provided such death occurred during the Optionee's service on
the Board, or within three months following the termination of such service by
reason of the Optionee's retirement after reaching the age of 65 years or the
Optionee's retirement after becoming permanently disabled. Such Option may be so
exercised by the Optionee's executors, administrators or heirs only with respect
to that number of shares of Stock which the Optionee had an Option to purchase
and which Option was exercisable (but had not theretofore been exercised) as of
the date of the earlier of the (i) retirement of the Optionee after reaching the
age of 65 years or after becoming permanently disabled, or (ii) death of the
Optionee. In no event may the Option be exercised at any time after the
expiration of the Option Exercise Period set forth in Section 5.4 hereof.
c. Retirement or Disability. If an Optionee's service on the
Board is terminated prior to the exercise of his Option in full, by reason of
the Optionee's retirement after reaching the age of 65 years or by reason of the
Optionee's retirement after becoming permanently disabled, the Optionee shall
have the right, during the period ending thirty-six months after the date of his
termination of service on the Board, to exercise his Option. Such Option may be
exercised by the Optionee only with respect to that number of shares of Stock
which the Optionee had an Option to purchase and which Option was exercisable
(but had not theretofore been exercised) as of the date of the earlier of (i)
the retirement of the Optionee after reaching the age of 65 years, or (ii) the
date the Optionee becomes permanently disabled. In no event may the Option be
exercised at any time after the expiration of the Option Exercise Period set
forth in Section 5.4 hereof.
5.7 Nontransferability of Options. No Option granted pursuant to the
Plan may be transferred by an Optionee. Subject to the provisions of Section
5.6(b) hereof, the Option shall be exercisable only by an Optionee during his
lifetime.
5.8 Rights as Stockholder. An Optionee shall have no rights as a
stockholder of the Company with respect to any shares of Stock subject to an
Option prior to his purchase of such shares of Stock by exercise of such Option
as provided in the Plan.
5.9 Right as a Director. Neither the Plan, nor the granting of an
Option hereunder, nor any other action taken pursuant to the Plan, shall
constitute or be evidence of any agreement or undertaking, express or implied,
that the Company will retain any director for any period of time, or at any
particular rate of compensation, or with any other benefits whatsoever.
6. DELIVERY OF STOCK CERTIFICATES
6.1 The Company shall not be required to issue or deliver any
certificate for shares of Stock purchased upon the exercise of all or any
portion of any Option granted under the Plan prior to the fulfillment of any of
the following conditions which may, from time to time, be applicable to the
issuance of the Stock:
a. Listing of Shares. The admission of such shares of Stock to
listing on (i) all stock exchanges on which the Stock of the Company is then
listed or (ii) the NASDAQ.
b. Registration and/or Qualification of Shares. The completion
of any registration or other qualification of such shares of Stock under any
federal or state securities laws or under the regulations promulgated by the
Securities and Exchange Commission or any other federal or state governmental
regulatory body, which the Board shall deem necessary or advisable. The Company
shall in no event be obligated to
B-4
<PAGE>
register any securities pursuant to the Securities Act of 1933, as amended, or
to take any other action in order to cause the issuance and delivery of such
certificates to comply with any such law, regulations or requirement.
c. Approval or Clearance. The obtaining of any approval or
clearance from any federal or state governmental agency which the Board shall
determine to be necessary or advisable.
d. Reasonable Lapse of Time. The lapse of such reasonable
period of time following the exercise of the Option as the Board may establish
from time to time for reasons of administrative convenience.
7. TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
7.1 The Board may terminate the Plan at any time or amend or modify the
Plan at any time or from time to time, provided, however, that no such action of
the Board shall do any of the following:
a. Increase Number of Shares. Except as contemplated in
Section 3.2 of the Plan, increase the total number of shares of Stock subject to
the Plan without the approval of stockholders.
b. Change Terms of Outstanding Options. Modify the
requirements for eligibility for participation, or change the Option Price or
otherwise alter or impair any Option previously granted to an Optionee under the
Plan without the consent of the Optionee.
c. Increase Benefits. Materially increase the benefits
accruing to Eligible Directors with respect to Options granted under the Plan
without the approval of stockholders.
d. Continue Plan. Continue the Plan in effect beyond January
2, 2006, without the approval of stockholders.
8. MISCELLANEOUS
8.1 Plan Binding on the Successors. The Plan shall be binding upon the
successors and assigns of the Company.
8.2 Withholding Taxes. Whenever Federal, state and local tax is due on
the exercise of Options granted under this Plan, the Company may require the
Optionee to remit an amount sufficient to satisfy Federal, state and local
withholding taxes prior to the delivery of any certificate for such shares.
B-5
<PAGE>
BLONDER TONGUE LABORATORIES, INC.
One Jake Brown Road
Old Bridge, NJ 08857
PROXY CARD FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 7, 1998
This Proxy is being solicited on behalf of the Board of Directors
The Undersigned hereby appoints James A. Luksch and Robert J. Palle, Jr.,
and either of them (with full power to act alone), as Proxies of the
undersigned, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated on this Proxy Card, all
shares of Common Stock of Blonder Tongue Laboratories, Inc. (the "Company") held
of record by the undersigned on the record date of March 16, 1998, at the Annual
Meeting of Stockholders to be held on May 7, 1998 and at any postponements or
adjournments thereof, all as in accordance with the Notice of Annual Meeting of
Stockholders and Proxy Statement furnished with this Proxy.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
A [X] Please mark your
votes as in this
example.
FOR WITHHOLD
1. Election of two [ ] [ ] Nominees: James F. Williams
Class III Directors Robert B. Mayer
to hold office until
the 2001 Annual
Meeting of Stockholders or until their successors have been
elected and qualified.
(To withhold authority to vote for any individual nominee
write that nominee's name on the space provided below.)
- ----------------------------------------------------------
FOR AGAINST ABSTAIN
2. Proposal to amend the Company's 1995 Long Term [ ] [ ] [ ]
Incentive Plan to increase the number of shares
available for issuance thereunder from 500,000 to
750,000.
3. Proposal to approve the Company's Amended and [ ] [ ] [ ]
Restated 1996 Director Option Plan.
4. Proposal to ratify the appointment of BDO [ ] [ ] [ ]
Seidman, LLP as independent auditors for the fiscal
year ending December 31, 1998.
In their discretion, the Proxies are authorized to vote upon such other matters
as may properly come before the meeting and at any postponements or
adjournments thereof. If no direction is made on this Proxy Card, this Proxy
will be voted FOR the election of both nominees to serve as Class III
Directors and FOR proposals 2, 3 and 4.
Please mark, sign, date and return this Proxy Card promptly using the
enclosed envelope.
Signature____________________ _________________________ Dated:____________, 1998
Signature if held jointly
NOTE: Please sign exactly as name appears above. When shares are held by joint
tenants, both stockholders should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If a Corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in
partnership's name by authorized person.
